The Crucial Number is your company's cost to acquire a new customer. But what makes it crucial?
cru·cial kro͞oSHəl adjective
decisive or critical, especially in the success or failure of something.
Crucial means decisive or life and death. It's crucial because this one number determines the level of success for most companies.
Read on to learn why.
Predictable Sales Process
Is your sales process predictable or more hit or miss?
Smaller companies often depend on referrals for new business. Referrals are great—we love them and you should have them. But, they aren't predictable. Predictable sales are essential to scale and grow.
Or, your company may depend on a superstar salesperson. That can be good, too. It's just not very safe or predictable. What do you do when a competitor bribes your superstar to leave, or your superstar decides to work on their golf game for a few months?
Without a predictable sales process, you can't even calculate your Crucial Number, much less make improvements.
Knowing your Crucial Number means having a predictable process.
Lifetime Customer Value
There's a balance between the cost of acquiring a customer and the lifetime value of that customer.
Think of it like a vending machine that dispenses new customers. You deposit the cost to acquire a customer and a new customer pops out of the chute.
But is that new customer good for your business? Will they help your company thrive? When the Crucial Number is low enough and the Lifetime Value is high enough, you're in great shape.
If not, you've got two huge levers to improve your prospects:
Reduce the cost to acquire a customer
Examine everything from marketing through sales to the final close to find bottlenecks and places you can improve efficiency.
Increase lifetime customer value
Increase prices or add more products and services to maximize customer value.
Map Your Sales Process
You can get a ballpark estimate of your Crucial Number by adding up all the cost of marketing, advertising, and sales. Everything. The total cost. Then, divide by the number of new customers.
Most people who do this for themselves leave out costs and come up with a number that's only a fraction of the real cost. Don't make this mistake.
Now, you've got a number. But, you don't know where to start optimizing, where to look for efficiencies and improvements.
To make real changes, you'll want to map out your sales process step-by-step. All the way from advertising or initial contact through to receiving payment from your new customer.
What happens in each step?
What is the conversion rate for each step?
What does each step cost?
Should the step be broken down into several sub-steps?
Look for places where the conversion rate drops off. That's where there's the best opportunity to make changes. If there's a step where 80% of prospects move forward, there may not be much room for improvement. If only 5% move forward, that step is a bottleneck and you can make a real impact.
The best way to compute your Crucial Number is to calculate the cost for each step, then add up the total cost. Now you really know how your business works, and can confidently initiate change.
I'll warn you that for B2B sales, it's not uncommon to have 30 steps or more. And larger companies may have multiple funnels that should be analyzed.
I realize that really understanding your Crucial Number and mapping your sales process takes some work. If you can come up with a better use of your time ... I dare you ... Leave a comment and tell us how!
If you want to review the specifics for your company, schedule a Crucial Number review. We’ll focus exclusively on your crucial number, sales process and opportunities to unblock your growth.
Inbound Sales requires companies to know their Crucial Number—what it cost to acquire a new customer. Otherwise you’re trying to optimize something that isn’t measurable. That’s a waste of time. More on this in a minute.
Recently, I wrote about how important it is to know your Crucial Number. Some of you may be wondering if it’s worth the effort.
“My Crucial Number is $834.” So what? Is that good or bad?
What's a new customer worth to you? Suppose an average customer has a lifetime value of $80,000. If it only cost you $834 to get this customer, do it again as early and often as you can!
If an average customer lifetime value is $8,000, then $834 may still be good as long as you have decent margins and a predictable sales process.
If a new customer only brings you $600, you’ve clearly got a big problem and need to make some major changes.
What does this have to do with Inbound Sales?
After we help clients determine their Crucial Number, the next step is usually to document their sales process and analyze each step.
You can think of the overall marketing and sales process like an oil refinery. In the beginning you start with crude prospects that barely seem like potential customers. Then, you warm them up and filter them to see which ones are qualified and are good fits.
After a while, sales starts working the leads. There’s more filtering as the relationship builds. At the end, refined customers are the result—the jet fuel that propels your company.
Here’s what you may not have considered. Each step in the process adds value. The further you go into the process the more expensive it is to lose a customer.
When we analyze a process, we look for the steps that have a big drop off. That’s where you’re leaking money. Look at the example below. Between Step 15 and Step 16, there’s a big drop. That’s expensive. (Yes, a typical business-to-business sales process will have 16 or more steps.)
We frequently see that there’s a gap in the handoff from marketing to sales. Marketing worked hard and spent $200 or more to get the lead. Then it goes nowhere.
I can hear some of our sales readers screaming, “That’s because the leads are lousy.” Maybe so. Or, it could be that key steps are missing and marketing is passing off the leads too soon.
Or … The handoff creates a disconnect for the buyer. This is a big problem—especially for companies that have been investing in Inbound Marketing.
Inbound marketing is very friendly, educational, and buyer-focused. What happens too often is that information learned during the marketing phase does not get passed through or used by sales.
The buyer exits the marketing phase feeling like they know the company and the company knows them. Then, the salesperson starts asking repetitive, basic questions all over again and doesn’t seem as helpful. It breaks the relationship and feels wrong for the buyer.
To know if your company is ready for Inbound Sales, consider:
Do you know your Crucial Number—the cost to acquire a new customer?
Have you laid out your sales process?
Do you need to add steps or content to have a smooth transition from marketing to sales?
Are your salespeople trained and expected to maintain the helpful vibe you created through Inbound Marketing?
It’s all about creating new customers who love your company and can’t wait to buy again. Do this efficiently and smoothly, and you’ll have a low Crucial Number and a thriving company.
If you want to review how all this applies to your company, schedule a Crucial Number review. We’ll focus exclusively on your crucial number, sales process and opportunities to unblock your growth.
Most companies and CEOs can easily tell you about their revenues and bottom-line profits. Some even know what a lead costs or other specific business metrics.
In my experience, though, few know their most crucial number—the cost to acquire a new customer.
I learned about the crucial number from John Paul Mendocha. He's a turnaround expert, and he always focuses on the cost of customer acquisition. Why? Because it's a key leverage point.
Lets use a specialized medical clinic as an example. When asked about their customer acquisition cost, they confidently stated it costs $104 to get a new customer. Average customer revenue was $500, so a new customer was expected to deliver almost $400 in margin (500 - 104).
Unfortunately, a more accurate analysis revealed that the actual cost to get a new customer was $416. The cost to serve that new customer was more than $100, so the company actually lost money every time they got a new customer. Now you see why they needed a turnaround.
Even worse is the situation where customer acquisition cost vary from one customer to the next. There's no way a company can be sustainable if customer acquisition is not predictable. Too many small businesses bump along hoping they'll some how trip over a new customer. The costs are all over the place.
How to Learn Your Crucial Number
So, what is your crucial number?
It's not on any of the reports your CFO or CPA deliver each quarter. That's one reason the crucial number is often unknown.
And, it's not in the marketing reports you may see. I recently saw a presentation where a marketing guy was talking about his 500% "ROI" from Facebook. He was dividing revenue by the cost for a click. That's not ROI. He completely ignored the cost to deliver the product, the costs of managing Facebook, and many other costs.
Your real Crucial Number is the total cost it takes to acquire a new customer. All the marketing costs. All the sales costs. All the advertising costs. Any other costs that go into acquiring a customer. Everything must be considered.
The best way to do the analysis is to map out the entire sales process—all the way from marketing to sales to close. Then, calculate the cost for each step. Not only will you learn your crucial number, but you'll also see which steps are adding the most cost. That's where you get leverage. Improve the expensive steps and you lower your crucial number while improving overall profitability.
Too many companies get this wrong, and I don't want you to be one of those. Calculate your Crucial Number, then schedule a crucial number review to make sure you've nailed it.
In the past few weeks, some big changes have been made over at Google. Some of these changes are permanent while others are in the experimental phase.
If you are wondering what these recent changes are and how they might affect your search marketing strategy, here are the details:
Clickable Phone Numbers in Organic Search Results
Recently, Barry Schwartz, a writer for Search Engine Roundtable, reported on a change that others have found in some of Google's organic mobile search results. Although Google has call extensions for ads that are published via AdWords, this is the first time that users have reported seeing phone number boxes in organic search results.
This is a feature that Google is currently testing. Since it is just a test, it is unclear whether this feature will be made permanent since it has not been officially announced by Google.
It does highlight the fact that local businesses should make sure that phone numbers are included in the rich snippets for their websites. Clearly, Google sees phone numbers and other snippets as an important feature of local business websites.
These changes are huge for businesses that use SEO and paid search advertising. In addition to pushing down organic results because there will now be 4 ads at the top of the page, advertisers will also feel the burn because removing the right-side bar for ad placements means that the cost-per-click for the top slots on the top and bottom of the page will increase.
Editable Knowledge Graph Cards
In addition to the other changes that are taking place on the search engine results pages, Google has also opted to make Knowledge Graph Cards editable. (A knowledge graph example is shown below.) This change is a big deal because it finally allows brands to have some control over the information that is displayed online in the search results.
Google has also added some protections in the form of content review to ensure that only accurate content is submitted. Only official representatives of a brand will be allowed to make changes while logged into their Google accounts. An official Google help page has been created to assist users in making changes to the information that appears in the Knowledge Graph Cards.
Google AMP Update
The Accelerated Mobile Page (AMP) is an open-source project that Google has launched in order to enhance the user experience for mobile pages. These pages are designed to load four times as fast as regular mobile pages and will also be more responsive for mobile users.
Starting with the Google Mobile-Friendly update that rolled out last year, the launch of AMP marks a continued focus on mobile user experience by Google. However, it is still unclear whether it will become the standard for the publishing industry because of the additional programming that it requires for implementation. There is also no news yet as to whether AMP pages will have an effect on search engine rankings.
With all of these changes happening at Google, it is important that you don't feel overwhelmed. Google’s Webmaster Guidelines should still be your guide on how to create quality content and links that will help you to maintain your rankings.
Review your current SEO and paid advertising strategies to ensure that you are still getting good results for a budget you can afford. If your costs have increased significantly, it may be time to make some changes.
Keeping up with the important changes that Google makes is the best way to help you maintain your rankings. If you need some help, consider hiring a professional service that can adjust your SEO and paid advertising strategies accordingly whenever changes do occur.
Do you stand out? If you don’t stand out, you blend in. And you do NOT want to blend in.
To succeed in business you need to do something different. You need to be remarkable.
re·mark·a·ble rəˈmärkəb(ə)l adjective: remarkable
worthy of attention; striking.
worth making a remark about.
Yes, remarkable means something that’s striking or worth noticing. But, it also means something that’s worth making a remark about—worth talking about.
Very good is bad—it’s still average. Anyone who’s been around for a while is very good. To channel Donald Trump, “Average is for losers.”
A few of you are thinking, “Great, I am already remarkable, now what?” Most of you are wondering, “How in the world can I make my company remarkable?” Keep reading, and I’ll answer both questions.
How to be remarkable
Step 1. Who Actually Cares?
No matter what, you can’t be remarkable for everyone. People have different preferences and will respond to different remarkables.
Instead, you have to choose who you want to serve and learn who actually cares. Pull out your Precise Prospect Profile. If you don’t have a prospect profile, make a second resolution to: Create My Precise Prospect Profile in the first quarter of 2016. Need Help?Download the Precise Prospect Profile kit.
Focus on your ideal prospect. They should care passionately about your business. If not, you’ve got a “nice to have” product or service. Work on becoming indispensable.
Before going too far, I’ll go ahead and tell you the bad news. If you want to be remarkable, you’re going to annoy some people. It’s weird, but to have some people love you, you have to accept that some will hate you. Sorry.
It’s not safe or comfortable to be remarkable. It is, however, highly profitable.
Step 2. Deliver a Micro-Remarkable
Here’s a good practice. Do something small that makes a difference. Take an existing customer and create something remarkable.
Choose the customer because they are important to you, have been with you for a long time, or because they represent your ideal customer.
Even better, involve them in the process. Develop some potential remarkables internally. Then, go to the customer, present the remarkables, and ask them to select the best one.
Go further. Ask them to help you expand the potential remarkables list. Deliver on one or all of them if you can. They will eagerly tell their friends.
Delivering micro-remarkables is an excellent practice. Do it on an ongoing basis. You’ll delight your customers and become adept at seeing new remarkables.
Step 3. What Do Customers Hate About Your Company or Industry?
Every industry has accepted practices and ways of doing things. And some customers absolutely hate the way the products or services are delivered.
How many of you feel good about getting an itemized bill from an attorney showing tenths of an hour billed at $400 per hour?
Some of you are thinking, “Yea, I know they hate _____, but it has to be that way because …” Does it really? Could you do things differently, erase the annoyance, and increase your profits? It takes creativity, but there’s often a way.
Step 4. Edgecrafting
Seth Godin wrote about being remarkable in The Purple Cow. Later on, he coined the phrase, “edgecrafting.”
Remarkability lies in the edges. The biggest, fastest, slowest, richest, easiest, most difficult. It doesn't always matter which edge, more that you're at (or beyond) the edge.Seth Godin
You can get an overview of Seth’s ideas by watching his TED video:
Here’s how edgecrafting works. Find the edges of a product, a service, or a problem. Then, explore ways to shift the edge. As Seth points out, push the edge way out to create a competitive advantage.
This work is very specific to each company and market, so it’s hard to provide a great example. To know more, schedule a Remarkability Audit for your company. It’s free, and you’ll get at least one potential remarkable to evaluate.
Edgecrafting Strategy Canvas
Another way to do edgecrafting is to create a strategy canvas positioning diagram. Map the relevant dimensions of a market on a graph like the example below. What happens if you completely eliminate a dimension, or max out a dimension? What if you add something totally new to the mix?
In this example our company (Shown with an Orange Line) is similar to the industry (Blue Line) in dimension 1 and dimension 3. But, our company has reduced dimension 2 and significantly raised dimension 4.
Each dimension is a property of the product or service. Things like price, speed, or quality. Any dimension that matters is fair game.
Quality or Features
Anything different that makes a difference (that matters).
Step 5. Why Are You in Business?
Look at “why.” Why are you in business? Why do your customers buy your product or service? Why did you start the business? Focus on the emotional reasons that go beyond profits.
At Inbound Team, we’re in business because we can’t stand to see companies struggle due to lack of leads. That's our "why."
Keep it simple. Look at this from a child’s perspective. Imagine that you are explaining what you do to a young child.
What change are you trying to make in your customers? Who do you want your customers to become? What change do you want to make for your customers and for the world?
Be human. Be connected. Be generous. Take a chance. Do something that might not work.
Find an idea where you’re afraid someone will say, “How dare you!” That’s how you’ll know you’re on the right track.
Step 6. Play the Remarkable Game
The remarkable game is great fun and it keeps you in practice. Pay attention as you encounter the world. Notice what works. How could each organization be more remarkable.
Go to a restaurant. What would make your experience more remarkable? What if they knew your name, read your mind, and knew exactly want you wanted to eat? What else could they do that would make your visit remarkable?
What would make your next internal meeting remarkable? How might your company culture be more remarkable?
Step 7. Tell Your Remarkable Story
Once you’re different, make sure to tell the story–get your messages clear and aligned. Does the home page on your website tell the story?
Companies that sell to other businesses often struggle to communicate effectively. A lot of context is required, so the explanation becomes too long and too complex.
Having a good story is one way to cut through the complexity. Tell a story about one small part of your product or service. It will make prospects curious to hear more.
All stories are invented, and it’s okay to be creative and embellish the details. Human beings love stories and your company is full of stories just waiting to be told. Create your remarkables and find the stories that will help your prospects hear and understand.
You Are Remarkable, But You Aren’t Done Yet
Now you’ve found or invented some great remarkables. Cool, but you aren’t done yet.
Being remarkable is an ongoing practice. Your competitors will steal remarkables where they can (this is also called “progress”). You have to constantly invent new remarkables. Welcome to the 21st century.
Review your remarkables and update your positioning chart regularly—once or twice a year. Keep looking for ways you can change the world.
And keep finding new stories that showcase your remarkables.
Be remarkable or invisible—your choice.
Being remarkable takes work. It’s some of the hardest work you’ll do in business. Do it anyway!
You may have remarkables you are taking for granted. It’s easy to be so close to your company that you can’t see. Get a remarkability audit for help seeing who you really are.
Take the challenge and promise to make your company remarkable in 2016.
In the last blog post we discussed some of the best channels available to attract visitors to your website. Now you know how to get visitors to your website, let's take a few minutes and determine if it has the elements needed for those visitors to become leads.
2. Convert Prospects to Leads
Take a look at your current website and ask yourself the following questions:
1. Is your website optimized for mobile?
Over half of all website visits come from a mobile phone or web-enabled device. If you have a website and you want to cut out half your visitors, make certain your website doesn't work on mobile.
Mobile is critical to your business and will continue to be so. Help visitors have a good experience on your site when they’re visiting from their mobile devices by ensuring your site is mobile friendly and responsive.
2. Is your website easy to navigate?
A great website has well thought out navigation. Think of the general path you want a site visitor to take. When the navigation's clear, visitors will stay longer on your site and will be more likely to become a lead.
Think through the structure of your website so it all makes sense in a logical flow. That way, when visitors come to your website, they will have an easier time navigating to the information that's most relevant to them.
3. Is the message clear?
Your website has the best chance to leave a good and lasting impression on your visitors when you have an uncomplicated and clear-cut message. To have a successful and engaging website, you need simple and clear communication of your company's product and purpose.
Will a visitor understand what's special and remarkable about your business from looking at the website? Make certain your website's purpose is clear on your home page and landing pages so it will deliver valuable leads and sales.
4. Do you have an offer?
When a visitor comes to your website, what action do you want them to take? What will get their attention and entice them to provide their name and email so you can follow up with them further?
To get visitors to take action, you need effective calls-to-action, or CTA's. These are an essential part of any website and will help direct visitors to take the action you desire.
Your website is competing with over 1 billion other websites in the world, so it must be in top selling condition. Take some time and make the adjustments necessary so every visitor to your website has the greatest chance to become a lead for your business.
If you need help determining how your website is doing, click below and sign up for a Free Website Review.
Planning and building a website is crucial to the success of your online marketing strategy. You are spending time and money getting visitors to your site, and that makes it one of the most valuable pieces of digital real estate you own.
Some companies run off and create a pretty website, then are surprised when it doesn’t get them the results they want. The trick is to design a website that aligns all the pieces to:
Convert prospects to leads, and
Change leads into customers
Let's explore how to do each of these.
1. Attract Prospects
It doesn't make much sense to have a great website if no one sees it. You need to get prospects to your website to learn about your business.
Certain channels, certain approaches, work better than others depending on who you sell to, so first, consider who you want to attract.
A precise prospect profile helps you know your customer. Knowing the most you possibly can about your prospects is key to grabbing their attention on the web and serving them on your website.
Search Engine Marketing
Search Engine Marketing is one of the first channels people think about for generating traffic. When someone goes to Google and types in a query, both paid and organic results are returned. The non-paid results are often one of the best places to get prospects.
However, page one of Google can be difficult to achieve. For companies that don’t have a lot of visitors right now, it's probably not the best place to start. So what's the next best thing?
Paid Search Advertising
If prospects go to Google and other search engines to look for a solution like the one your company provides, a good alternative may be to use Paid Search Advertising—Google AdWords for example.
But Google changes constantly. They recently announced they are not going to show ads along the right-hand side any more. Ads will only be shown at the top and bottom of the page, so the real estate just got reduced.
Paid ads can help you figure out what types of messages and which types of searches will most likely resonate and connect with actual buyers, so it's a useful tactic.
You can also connect with potential customers through Display Advertising. Display ads are the ads you see when you visit different websites. Display advertising has been impacted most recently because more people now use ad blockers in their browsers. Still, plenty of sites can help you to get in front of people and remind them of your products.
Display ads are less effective than search because people are not actively looking for the particular solution. They didn’t type something into Google, they just came across an ad, so it's more like a billboard along the side of the road.
A great way to connect with people is through Social Websites, primarily Facebook and LinkedIn. Your prospects visit these social watering holes, you just need to find them.
The nice thing about social, from a traffic generation perspective, is social websites know a lot about their users. That makes it easier to precisely target people to get exactly the right visitors to your website. (Here's another reason the Precise Prospect Profile is so essential.)
Social media can be quite noisy, and prospects can sometimes be difficult to find. If you know your product and your customers, and put in a little effort, you will reach exactly the right prospects for your business.
In the next article, we will discuss turning prospects into leads. If you can't wait and want three ways to generate more leads, sign up for a Free Lead Boost Review.
Google is continuously changing the rules. There’s no one sure-fire way to get to the first page or the top of the Google search results, but the overall best way is by publishing content that answers questions your prospects have.
Google wants us to think more like a customer. We use it every day in our own lives to search for answers to our own questions, so that shouldn't be too much of a stretch.
Think about the way Siri works on an iPhone. You push the button and you say, “Siri, what’s the best way to get traffic to my website?” Siri is going to go away and ask that question of the search engines.
So answering questions becomes a really great way to rank and attract visitors.
Google keeps getting smarter at figuring out what question people meant to ask and even untangling misspellings and misuse of words. But really it comes down to the questions themselves, the things people are concerned about and answering those questions with words and terms your customers use.
In the example I used above, “Siri, what’s the best way to get traffic to my website?” the two keywords are traffic and website. In the industry we talk about traffic, but average users who are looking to grow their business might not think to use that term. They might instead think about, “How do I get ranked on Google?” which is a variation on that same question.
So it is going to take a lot of research. The real way you get there is over time. The most successful online marketers have been at this for a while. They keep learning more and more about their prospects.
They learn how people are asking questions and which keywords they are using. They analyze the competition to see how they are optimizing their website, and are continuously improving and getting better at serving their prospects along the way.
The faster you start creating content that answers the questions your prospects have, the faster you are going to rank on Google and be found by prospects looking for your business. And make sure to tackle the tough questions—the ones no one else is talking about.
Creating content that answers all the questions your prospects are asking, while being genuinely helpful, is the best way to attract traffic to your website.
If you need help discovering the questions prospects are asking in your industry, sign up for a free Lead Boost Review.
When companies decide they need increased traffic to their website, they start blogging regularly, but searchers and search engines all too often don’t seem to care. There’s a reason why. The company isn’t focused on creating the right content.
Content will always resonate more with a potential customer if you’re viewing things from their point of view. Issues that need addressed most are typically “hot button” issues, but most businesses don’t want to touch these topics.
For many companies, creating content around these "hot button" issues means breaking away from traditional business marketing practices and feels too taboo.
In The Big 5: Blog Article Topics Guaranteed To Drive Traffic, Leads, & Sales, Marcus Sheridan states there are 5 subjects that move the needle in every single industry. They are the things that when a consumer is looking to make a buying decision, "they are searching it, they are asking it, they are thinking it, they are saying it, they are going to Google and typing it!"
For many companies, creating content around The Big Five means addressing subjects many don't want to talk about. But these topics have been proven to increase traffic, leads, and sales.
So what are they? Here they are:
Cost Questions. You don’t want to talk about cost or price on your website, but of course when you are getting ready to buy something you want to know, “What does it cost? What is the price?” Cost is at the root of all transaction considerations, so you need to address it with your content.
Problems, Issues, Negative Reviews.A lot of companies don’t want to address these. You have got to be willing to address the elephant in the room. If there are problems or issues about what you sell, you need to address them.
Versus or Comparisons. Have you ever been asked, “So which one would you choose?” Or, “How do you compare versus your competitor down the street?” We only like to talk about our stuff, but you can’t do that. You have got to talk about what the consumer wants to know, and consumers want to know how the competitive choices stack up against each other.
Reviews. How often do you and I search for reviews online? We are constantly searching for reviews to help us understand how products and services pan out in the real world, so do the research and become the go-to resource for helping customers make decisions faster.
Best. We love to search for best. Consumers use "best" queries to help identify top choices.
When you create content focus first on The Big 5. They require you to address things that you are not used to addressing, but if you want to truly increase trust, traffic, leads, and sales, The Big 5 will help you do it.
To learn more about whatThe Big 5 are, and how you can use them to keep your efforts from ending in yet another tragic content marketing story, watch the video.
If you need help writing Big 5 content for your site, sign up for a free Lead Boost Review or give us a call. We’d love to help.
Are you still using old outbound marketing techniques such as cold calling and cold emailing, and wondering why you are not seeing the results you used to? The buying process has changed and Inbound Marketing has become essential.
Inbound Marketing brings you qualified leads, warms prospects before you get in touch with them, helps educate your customers, and establishes you as an expert.